German industrial output rebounds

German industrial output rebounds

FRANKFURT - Both exports and industrial production bounced back in Germany in September, data showed on Friday, helping to mitigate some of the gloom that has descended on Europe's biggest economy recently.

German industry rebounded in September, official data shows.

Following a sharper-than-expected slowdown in activity in August resulting from the late timing of the summer holidays, industrial data for September showed a tangible improvement.

According to the economy ministry, industrial output rose by 1.4% in September, after contracting by 3.1% in August.

The day before, factory orders had also stabilised from the previous sharp drop.

And the federal statistics office Destatis calculated that German exports were up by as much as 5.5% in September, almost making up for the sharp 5.8% contraction seen the previous month and boosting the country's trade surplus.

Exports to the EU were 7.1% higher than they had been a year ago and exports to countries outside the EU jumped by 10.5%.

Analysts said the positive data were largely a technical correction to the holiday-related slump the previous month.

Berenberg Bank economist Christian Schulz said Germany's "current rough patch is driven by a downward spiral in business confidence," which was triggered by concerns about the economic fallout from the crisis in Ukraine.

However, "the strong trade data recalls that Germany remains fundamentally strong and competitive. These fundamentals will come through eventually and some surveys suggest that confidence may be stabilising at the moment," Mr Schulz said.

With the European Central Bank easing monetary conditions and German Finance Minister Wolfgang Schaeuble announcing plans for more public investment, that "might aid the turn-around, which we expect to lead Germany back to trend growth in the second quarter of 2015," the expert added.

UniCredit economist Andreas Rees that on the basis of all available monthly hard data so far, he was pencilling in gross domestic product (GDP) growth of 0.1% in the third quarter.

"The forecast risks are tilted to the upside," meaning that the prognosis could be upgraded, Mr Rees said.

Germany would therefore escape a technical recession, which is defined as two consecutive quarters of GDP contraction, the analyst said.

German GDP had contracted in the second quarter and official third-quarter growth data are scheduled to release next week.

BayernLB economist Stefan Kipar said that "following the September data, the economic situation is looking a lot less threatening than earlier."

"The data strengthen our conviction that the German economy will not slip into recession. Indeed, we're pencilling in slight growth of 0.1% and continuing moderate growth in the winter," Mr Kipar said.

"Nevertheless, increased growth momentum cannot be expected in the coming quarters, with the conflict in Russia still weighing on the German economy," he warned.

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